Rejoining the EU
Debate between Bernard Jenkin and Tony Vaughan(4 days, 1 hour ago)
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Sir Bernard Jenkin (Harwich and North Essex) (Con)
Listening to this debate is amusing, but rather depressing in other ways. There is a heartfelt hope among a great many people here that rejoining the EU would somehow be transformative for the British economy, which they think has done much worse as a result of being outside the EU. [Interruption.] That is the thesis, isn’t it? Let’s look at the facts.
The UK economy has outgrown France and Germany since we left the EU in 2021. In fact, some of our economic growth is a direct result of leaving the EU. We have not over-regulated our tech sector in the way that the EU has, so we are getting the lion’s share of inward investment and far greater gross value added in that sector than France or Germany. Interestingly, the tech sector has been excluded from the EU reset talks.
Before covid, the City of London employed some 500,000 people. Today, over 680,000 people are employed in the City. The financial services sector is booming outside the EU because we have scrapped MiFID II, the bonus cap and regulations on derivatives trading, and all the people who left because of the fear campaign are coming back.
What is the basis for saying the EU has damaged our economy except for these two forecasts, which are conjectural projections and not things that have happened? They are not facts. They are quoted by the OBR and the Treasury and the Prime Minister believes them, and I am sure there is sincere belief in those figures across Westminster Hall today, but they are not facts. The only facts are that the UK economy has grown by 7.9% over that period, while France’s economy has grown by 6.8% and Germany’s economy has grown by only 1.1%. I was not aware that Germany or France had left the EU and that their economies had been damaged by their leaving, but that is the basis on which we are being told that we have damaged our economy.
Sir Bernard Jenkin
No, I will not give way; I am going to be very brief.
Services exports to the EU have rocketed, because there is no single market in services and we export a huge amount to the EU, as we do to the rest of the world. Overall, our trade has boomed since Brexit; our trade with the EU and the rest of the world combined has grown very substantially.
Does anybody know what proportion of GDP is represented by goods exports to the EU? Hon. Members are quoting all these businesses from their constituencies, but how representative are they of the economy as a whole? The EU may be our single biggest export market, but it represents only 6% of our GDP. Hon. Members are looking very puzzled, because people have brainwashed themselves. They think that trade is the entire economy, but it is not; trade is only a proportion of the economy.
Our trade with the rest of the world has expanded much more in comparison with our period in the single market. For example, between 1997 and 2019, when we were in the single market, goods exports to non-EU countries grew by 85%, but goods exports to the EU fell from 10% to 7.8%. Our exports to the EU were already declining. Why was that? It was because the internal market is a failure. The countries that form the internal market today represented 30% of global GDP when we joined the single market in 1992. These are Library figures that I am citing, by the way; Members can go and check them out. Today, the EU represents 17.3% of global GDP. It is declining; it is losing global share.
The United States had 25% of global GDP in 1992 and it still has 25% of global GDP. Why is that? It is because its economy is much less regulated, it has much lower taxes, it rewards enterprise and risk, and it is not mired in the Code Napoléon and the way of cautiously regulating everything that the EU is. If the EU could deregulate, it would possibly be in our economic interests to join it, but it is incapable of deregulating. Therefore, the case for joining the single market has collapsed in the few minutes in which I have been speaking.
Tony Vaughan
I thank all hon. Members for turning up today and speaking in this debate. It is interesting that we have had one Conservative MP, the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), a Reform MP—the hon. Member for East Wiltshire (Danny Kruger) is almost out the door, but I am going to acknowledge him all the same; he has left his colleague the hon. Member for Romford (Andrew Rosindell) in his place—and the shadow Minister speak up to defend the status quo. Their defence of the current Brexit rules referred to evidence that, I think it is fair to say, was selectively referenced and in denial of where the weight of the evidence is.
I will start with the remarks of the hon. Member for Harwich and North Essex, who challenged the idea that Brexit has damaged our economy and referred to the fact that the GDP of other countries is lower than ours. But that is not the point: the comparison is with the situation that we would have had if we had not left the European Union. That point was made earlier. The National Bureau of Economic Research has found that our GDP was 6% to 8% lower by the end of 2025 than it would have been if we had not left the EU. It also found that investment in the UK was 12% to 13% lower, employment was 3% to 4% lower and productivity was 3% to 4% lower; the OBR agrees.
The hon. Member also minimised the significance of individual examples given by numerous hon. Members in this room about Brexit-related red tape and British exporters. But the evidence is clear: our trade volumes are billions less than before Brexit. For example, a study by the LSE found that in 2022, there was £27 billion less in goods exports, which is a 6% reduction compared with the no-Brexit counterfactual, and 14% of firms stopped exporting to the EU altogether after post-Brexit trading arrangements came into force. That research found that smaller firms were particularly affected by those arrangements, whereas larger firms were able to absorb the additional costs. That is what hon. Members are seeing all over the country.
Tony Vaughan
I fear that the hon. Member’s points have not moved with the evidence, but I will give him a chance to respond.
Sir Bernard Jenkin
The logic of the Government’s position is that because Canada sends 75% of its exports to the United States of America, they had better join the United States and give up their sovereignty in order to get rid of barriers to trade. The idea that Canada will become an associate member of the EU and that the EU is going to be able to get a grip of Canada seems rather fanciful, but can the hon. Gentleman explain why the Carney logic about the UK being in the single market does not apply to his own country?
Tony Vaughan
I thank the hon. Member for his intervention but as far as I can see, none of what he said is relevant to the question of whether any of his points are well founded. The evidence is as I have read out. He needs to engage with the weight of the evidence, not the selective examples that those who oppose a closer relationship with Europe ultimately rely on.